Strategic Management – All Practice Quizzes

Once a firm acquires a competitive advantage, they are usually able to sustain the competitive advantage for an extended period of time.

False

Newspaper companies in the United States provide a good example of how a company can sustain a competitive advantage over the long term.

True

In order for a firm to achieve sustained competitive advantage, a firm must continually adapt to changes in external trends and events and effectively formulate, implement, and evaluate strategies that capitalize upon those factors.

False

A vision statement answers the question, “What is our business?,” whereas a mission statement answers, “What do we want to become?”

False

Identifying an organization’s existing vision, mission, objectives and strategies is the final step for the strategic management process.

True

The poor reward structure is one reason managers do not engage in strategic planning.

True

Strategic-management must be a self-reflective learning process that familiarizes managers and employees in the organization with key strategic issues and feasible alternatives for resolving those issues.

True

Today, managers and employees can be found personally liable if they ignore, conceal, or disregard a pollution problem.

False

Nonprofit organizations have less need for strategic management because they are not interested in making a profit.

External environment

What is a theme that has become a more important strategic issue due to global warming, bioterrorism, and increased pollution?

Strategic management

What can be defined as the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives?

Formulation

During what stage of strategic management are a firm’s specific internal strengths and weaknesses determined?

Interpersonal

What types of skills are especially critical for successful strategy implementation?

Strategists

Which individuals are most responsible for the success and failure of an organization?

True

A mission statement, sometimes called a creed statement, can be defined as an “enduring statement of purpose that distinguishes one organization from other similar enterprises.”

False

There is no need for a mission statement in small, nonprofit organizations.

False

An important question a mission statement should answer is, “What do we want to become?”

False

When developing a mission statement, it is usually advisable to involve as few managers as possible.

False

The most important time for a company to develop a mission and vision statement is when the company is experiencing financial difficulty.

True

A firms concern for employees in a mission addresses the question, “Is the firm responsive to social, community, and environmental concerns?”

in annual reports.

The vision and mission statement can often be found

What do we want to become?

Which of these basic questions should a vision statement answer?

One sentence

The ideal length of a vision statement is:

Drucker

Who is referred to as “the father of modern management?”

What is our business?

The mission statement answers which question?

When the firm is successful

What is the best time to re-visit a mission statement?

a customer orientation

The three characteristics of a mission statement are a declaration of attitude, a declaration of social policy and:

True

To perform an external audit, a company first must gather competitive intelligence and information about social, cultural, demographic, environmental, economic, political, legal, governmental, technological, and global trends

False

Motor vehicle firms in the United States are vulnerable when the value of the dollar falls.

False

A low value of the dollar means lower exports and higher imports.

True

The United States is getting older and less Caucasian.

True

Political forecasts can be the most important part of an external audit for firms that depend heavily on government contracts.

False

Internal opportunities can be represented by major competitors’ weaknesses.

True

Competitive intelligence is not considered corporate espionage because 95 percent of the information a company needs to make strategic decisions is available and accessible to the public.

False

Because companies are fearful of corporate espionage, cooperative agreements between competitors are becoming less popular.

True

According to Michael Porter, five competitive forces create vital opportunities and threats to organizations: (1) new entrants, (2) substitute products or services, (3) bargaining power of suppliers, (4) bargaining power of buyers, and (5) rivalry among existing firms.

True

Rampant corruption and the absence of a democratically established legal system are risks that still restrain firms from initiating business with China.

True

In 2006, china produced more automobiles than Germany.

Analyzing financial ratios

__________ is not part of an external audit.

Gather competitive intelligence and information about external trends

To perform an external audit, a company first must:

More important than

The I/O approach to competitive advantage advocates that external factors are ________ internal factors in a firm achieving competitive advantage.

None

It is predicted that the United States will have how many racial or ethnic majorities by the year 2075?

China

Who are the world’s longest-living people?

Political

When an industry relies heavily on government contracts, which forecasts can be the most important part of an external audit.

China

Who is Japan’s largest trading partner

Competitive

Technological advancements can create new ______ advantages that are more powerful than existing advantages.

Divestiture is essential to growth

Which of the following is not a characteristic that describes the most competitive companies in America?

Bargaining power of unions

What is not one of Michael Porter’s five competitive forces?

Rivalry among competing firms

According to Porter, what is usually the most powerful of the five competitive forces?

True

The process of performing an internal audit, compared to the external audit, provides more opportunity for participants to understand how their jobs, departments and divisions fit into the whole organization.

False

Proponents of the resource-based view argue that external factors are more important than internal factors for a firm in achieving and sustaining competitive advantage

True

In China, business behaviors revolve around guanxi, or personal relations.

False

In China, to show that you enjoyed your meal, you should completely finish your food.

False

Punctuality, in general, is revered in all cultures of the world.

True

The only certain thing about the future of any organization is change.

True

There are seven basic functions of marketing: customer analysis, selling, product and service planning, pricing, distribution, marketing research and opportunity analysis.

False

Financial ratios are not applicable to nonprofit organizations.

True

A limitation of financial ratios is the fact that they are based on accounting data.

distinctive or core competencies

A firm’s strengths that cannot be easily matched or imitated by competitors are called

Organizational resources

The internal resource categories used in the resource-based approach are physical resources, human resources and….

Employee training

Organizational resources include all of the following except:

Emotions

Which of the following is not a cultural product?

Organizing

Which management function includes breaking tasks into jobs, combining jobs to form departments and delegating authority?

Are the organization’s products positioned well among competing products?

All of the following are key questions that can reveal internal strengths and weaknesses in the management department except:

Liquidity

What category of ratios measures a firm’s ability to meet maturing short-term obligations?

Profitability

What category of ratios includes return on total assets and return on stockholders’ equity?

Average collection period

Which ratio would be considered an activity ratio?

Germany

Which country has the highest average hourly pay for auto workers?

Singapore

Where is the largest seaport, in terms of ship container traffic processed annually?

Data; information

__________ become(s) __________ only when they are evaluated, filtered, condensed, analyzed and organized for a specific purpose, problem, individual, or time.

Value chain analysis

The process whereby a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing products to marketing those products is called

dividing a firm’s operations into specific activities or business processes.

The initial step to implementing value chain analysis is

False

The overall aim of the Balanced Scorecard is to balance financial objectives with strategic objectives.

True

Horizontal integration is seeking ownership or increased control over competitors.

True

Gaining ownership or increased control over distributors or retailers is called forward integration strategy.

True

Forward integration strategy is especially effective when the availability of quality distributors is so limited as to offer a competitive advantage to those firms that integrate forward.

True

A strategy of seeking ownership or increased control of a firm’s supplier is backward integration.

True

If a firm’s present suppliers are expensive and unreliable in meeting the firm’s needs for parts, components and/or raw materials, the firm should pursue a Backward integration strategy.

True

Market development includes introducing present products into new geographic areas.

True

Most companies favor related diversification strategies in order to exploit common use of a well-known brand name.

True

AT&T’s acquisition of BellSouth in 2007 was the largest telecommunications acquisition ever approved in the U.S.

True

Unrelated diversification is an appropriate strategy when an organization’s present channels of distribution can be used to market the new products to current customers.

False

Morgan Stanley’s building of a casino in Atlantic City is a good example of related diversification.

stockholder equity

All of the following are important factors in the Balanced Scorecard except:

Forward integration

Southwest Airlines selling tickets through Galileo is an example of which type of strategy?

Divestiture

Whirlpool selling its struggling Hover floor-care business to Techtronic Industries is an example of which type of strategy?

Market Development

Burger King opening its first restaurant in Japan is an example of which type of strategy?

Forward integration

Web sites to sell products directly to consumers are examples of which type of strategy?

When an organization can gain monopolistic characteristics in a particular area or region without being challenged by the federal government for “tending substantially” to reduce competition.

In which situation would horizontal integration be an especially effective strategy?

Market Development

When a domestic company first begins to export to India, it is an example of:

Retrenchment

Nortel cutting another 2,900 jobs in 2007 in an attempt to stay in business would be an example of:

A turnaround or reorganization strategy

What kind of strategy is retrenchment?

True

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the Boston Consulting Group (BCG) Matrix, the Internal-External (IE) Matrix and the Grand Strategy Matrix are included in stage two of the strategy-formulation framework.

True

The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit.

True

In a BCG Matrix the pie slice indicates the proportion of corporate profits generated by that division.

False

Cash cows represent the organization’s best long-run opportunities for growth and profitability.

True

The major overall benefit of the BCG Matrix is that it draws attention to the cash flow, investment characteristics and needs of an organization’s various divisions.

True

Viewing businesses as star, cash cow, dog or question mark is an oversimplification.

True

Culture includes the set of shared values, beliefs, attitudes, customs, norms, personalities, heroes and heroines that describe a firm.

True

Whenever two firms merge, it becomes especially important to evaluate and consider culture-strategies linkages.

True

Boards of directors are composed mostly of outsiders who are becoming more involved in an organization’s strategic management.

True

The Sarbanes-Oxley Act put an end to the “country-club” atmosphere of most boards and has shifted power from CEOs to directors.

Defensive

What type of strategy would divestiture be classified as?

Companies with more than one division

For what type of company is the BCG Matrix ideal for analyzing?

Y-Axis

In the BCG Matrix, which element represents the industry growth rate in sales, measured in percentage terms?

Question Mark

How would a division with a low relative market share position in a high growth industry be described?

Retrenchment

Which strategy would be most appropriate for a company classified as a Dog?

Market Penetration

According to the Grand Strategy Matrix, which strategy is recommended for a firm with rapid market growth and a strong competitive position?

Goverance

The act of oversight and direction for an organization is referred to as

At least two directors are current or former company executives.

All of the following are principles of good organizational governance, as established by Business Week, except:

True

Strategy formulation requires coordination among a few individuals, but strategy implementation requires coordination among many.

True

Four types of resources that can be used to achieve desired objectives are financial, physical, human and technological.

False

Avoidance, infusion and confrontation are the classifications for the various approaches for minimizing and resolving conflict.

True

Most large companies have abandoned the functional structure in favor of decentralization.

True

Managing as if ‘the earth matters’ requires an understanding of how international trade, competitiveness and global resources are connected.

True

The United States leads the world in promoting women and minorities into mid- and top-level managerial positions in business.

Considerable time and effort should be devoted to assuring objectives are well conceived because they represent the basis for

To increase motivation

Which of the following issues may not require a management policy?

Diffusion

Which approach for managing and resolving conflict involves playing down differences between conflicting parties while accentuating similarities and common interests?

Functional structure

What type of organizational structure do most small businesses follow?

Functional

Which organizational structure is the most simple and inexpensive?

Delayering

Restructuring is also referred to as

Benchmarking

Which of these involves comparing a firm against the best firms in the industry on a wide variety of performance-related criteria?

Cost reduction

The primary benefit sought from restructuring is

All of the above (Absenteeism, sabotaging production machines, filing unfounded grievances, and an unwillingness to cooperate

Resistance to change can manifest itself through

Less than 10 percent

What percent of strategies formulated are successfully implemented?

Market segmentation and product positioning

Which two variables are of central importance to strategy implementation?

Stock issuance

What becomes a more attractive financing technique when cost of capital is high?

Dilution of the control of the company

What is a drawback of using only equity to raise capital?

Reduce costs

A good information system can allow a firm to

All of the above (Reviewing the underlying internal and external factors that represent the bases of current strategies , measuring organizational performance, taking corrective actions)

Which of these is/are a basic activity of strategy evaluation?

Adequate and timely feedback

What is the cornerstone of effective strategy evaluation?

Qualitative and quantitative criteria

Strategy evaluation is based on

Social responsibility

Which of the following is not a component of the Balanced Scorecard?

All of the above (Protect, mend, preserve, reflect good stewardship of)

Sustainability refers to the extent that an organization’s operations and actions _______ the natural environment.

Strategists such as CEOs and business owners

are the individuals primarily responsible for ensuring that high ethical principles are espoused and practiced in an organization.

Preventing environmental harm

All of the following business actions are considered to be unethical except:

inappropriate gifts

Unethical activities that plague online commerce include all of the following except:

A document that provides behavioral guidelines that cover daily activities and decisions within an organization

A code of business ethics is

Messages from the CEO or business owner emphasizing ethical business practices, The development and discussion of codes of ethics, Procedures for discussing unethical behavior, Procedures for reporting unethical behavior (All of the above)

Ethics training programs should contain which of the following?

5

According to a recent Wall Street Journal article, _______ percent of all firms sampled had no restrictions on boss-subordinate love affairs at work.

Make enough profit to cover the costs of the future, because if this is not achieved then no other social responsibility can be met

According to the text, the first social responsibility of any business is to

Texas

Which state generates the greatest number of megawatts of wind power?

Remain a domestic competitor

In an industry that is, or is rapidly becoming global, the riskiest possible posture is to

Social, cultural, governmental, political (all of the above)

The _______ opportunities and threats that face a multinational corporation are almost limitless.

? Geographic distance, cultural differences, variations in business practices, national differences (all of the above)

Communication between domestic headquarters and overseas operations is often made difficult by

Joint ventures

can enable firms to learn the technology, culture, and business practices of other people and to make contacts with potential customers, suppliers, creditors, and distributors in foreign countries.

underestimated; overestimated

Strengths of competitors in foreign lands are often _______, and weaknesses are often _______.